Senomyx's CEO Discusses Q2 2011 Results - Earnings Call Transcript

| About: Senomyx, Inc. (SNMX)

Senomyx Inc. (NASDAQ:SNMX)

Q2 2011 Earnings Call

August 5, 2011 11:00 AM ET

Executives

Gwen Rosenberg – VP, IR

Kent Snyder – CEO

John Poyhonen – President and COO

Antony Rogers – VP and CFO

Sharon Wicker – SVP and Chief Commercial Development Officer

Analysts

Jonathan Feeney – Janney Montgomery Scott

Scott Henry – Roth Capital

Dalton Chandler – Needham & Company

Doug Thomas – JET Investment Research

Operator

Good morning. We will now begin the Senomyx Second Quarter 2011 Conference Call. At this time, I would like to inform you that this conference call is being recorded and that all participants are in a listen-only mode. At the request of the company, we will open the conference up for questions-and-answers after the presentation. (Operator Instructions).

I would now like to turn the call over to Gwen Rosenberg, Senomyx’s Vice President of Investor Relations and Corporate Communications.

Gwen Rosenberg

Good morning and welcome to the Senomyx second quarter 2011 earnings and corporate update conference call. Participating in this call from Senomyx will be Kent Snyder, Chief Executive Officer; John Poyhonen, President and Chief Operating Officer; Tony Rogers, Vice President and Chief Financial Officer; Don Karanewsky, Senior Vice President-Discovery and Chief Scientific Officer and Sharon Wicker, Senior Vice President and Chief Commercial Development Officer.

Before we begin, please note that during the course of this call, we may make projections or other forward-looking statements regarding future events or financial performance of the company that involves risks and uncertainties. The company’s actual results may differ materially from the projections described in the press release and this conference call.

Factors that might cause such a difference include, but are not limited to, those discussed in our quarterly and Annual Reports filed with the SEC. Copies of these documents are available upon request from Investor Relations at Senomyx or may be accessed via our website at www.senomyx.com.

I’d now like to turn the discussion over to Kent Snyder, CEO of Senomyx.

Kent Snyder

Thank you, Gwen. Good morning to everyone and thank you for joining the Senomyx management team for our conference call and webcast. During this call, we’ll provide you with a general business and financial update for the second quarter of 2011. This will be followed by a question-and-answer session.

I’m very pleased to report that Senomyx had important commercialization and research and development accomplishment this past quarter as well as improved financial results from operations compared to the previous year. I’ll start the call by discussing our recent achievements in Senomyx Sweet Taste Program most significantly beginning in the second quarter our commercialization partner Firmenich received initial orders for S6973.

As you may recall S6973 allows sucrose to be reduced in products by up to 50% while maintaining the desired taste of natural sugar. We are impressed with Firmenich’s capabilities and efforts in introducing S6973 to top tier clients for use in a wide spectrum of product category. Later in the call, John will discuss ongoing marketing activities and our expectations for additional orders during the year.

Firmenich is also continuing marketing efforts for S2383, Senomyx enhancer of the artificial sweetener sucralose. S2383 can be used in foods and beverages to enable up to a 75% reduction in the concentration of sucralose, with improved taste characteristics in some applications. It is rewarding that products containing S2383 are now on the shelves in North America. Firmenich is working with a number of clients for commercialization of other branded products utilizing S2383.

In addition, we are announcing another important accomplishment today. As part of our two sweet enhancements collaboration, Senomyx has advanced S9632, a new sucrose enhancer. Taste tests have demonstrated that S9632 can enable reduction of up to 50% of the sugar in product prototypes without compromising taste. S9632 also possesses advantageous physical properties that are beneficial for a broad range of beverages and foods.

As we discussed previously our current sucrose enhancer S6973 is very effective enabling a reduction of sugar in virtually all foods and select beverage categories. The new sucrose enhancer S9632 should be useful for a larger number of beverages as well as food products. The expected utilization of S9632 should be very complementary to S6973. The development phase includes safety studies and other activities intended to support regulatory filings in the U.S. and else as well.

We have been successful in receiving GRAS or Generally Recognized As Safe regulatory determination in the U.S. for flavor ingredient from our sweet, savories and Bitter Blockers Program. In our past experience and process from selection for development until received a GRAS status has taken from 15 to 18 months. However it is somewhat too early to predict specific timelines for S9632. We’ll provide additional details regarding development timelines during future earnings calls.

Lastly regarding the Sweet Taste Program, Senomyx also has an ongoing effort to discover and develop new flavor ingredients that amplify the sweet taste of fructose a key component of high fructose corn syrup. We have identified enhancers that demonstrated activity in our proprietary fructose screening assays and enhancing activity in taste tests utilizing high fructose corn syrup, a commonly used sweetener in many beverages optimization of these enhancers, further screening, and additional taste tests are ongoing.

In addition, Senomyx activities to discover and develop natural high-potency sweeteners continue to progress. Current activities include continued expansion and high-throughput screening of plant-derived samples from our natural products library, identification of the components that show significant activity in the assay, and scale-up of these samples for in-house taste tests. We are encouraged by the advances we have been making in this program.

Turning to our other discovery and development programs, as we have discussed previously the primary goals on our Bitter Blockers Program are to reduce or block bitter taste and to improve the overall taste characteristics of foods, beverages and ingredients. Two of Senomyx’s bitter blockers, S6821 and S7958, have received GRAS regulatory status.

S6821 has demonstrated activity against bitter tasting foods and beverages that include soy and whey proteins, menthol, caffeine, cocoa, and Rebaudioside A also known as stevia.

S7958, a related bitter blocker with similar functionality, has alternative desirable physical properties that may be useful for these and other product applications. Two Senomyx collaborators are currently evaluating S6821 for potential future commercialization. We cannot name the collaborators at this time due to confidentiality considerations but we will provide additional information about their activities when possible.

During our last quarterly call, we updated you on advances in our Cooling Flavors Program. The goal of this program is to identify novel cooling flavors that do not have the limitations of currently available agents. As we have noted Senomyx identified new cooling flavors that mimic the time intensity profile of agents that have a rapid onset and short acting cooling effects as well as agents with a slower onset and longer acting cooling effects.

Importantly lead cooling flavor candidates have demonstrated approximately ten folds of greater potency than a commonly used agent in taste tests. Senomyx and Firmenich are partner for this program are continuing to evaluate these new cooling flavors in a variety of product prototypes, which could lead to a decision to begin development activity.

We continue to be keenly focused on Senomyx Salt Taste Program. The goal of this program is to identify flavor ingredients that allow a significant reduction of sodium in foods and beverages yet maintain the salty taste desirable to consumers. Senomyx has assembled a proprietary database of proteins found in taste buds and is exploring the role of a number of these proteins that may be involved in salt taste perception.

Progress is being made in this high-priority program as company researchers are using new, more sensitive analytical systems to discover specific proteins that could be viable candidates for the receptors or co-factors responsible for salt taste.

Lastly regarding our discovery and development activities, Senomyx continues to be diligent in seeking protection for our intellectual properties. As of June 30, 2011, the company is the owner for exclusive licensee of 251 issued patents and several hundred pending patent applications related to proprietary taste receptor technology in the U.S., Europe and elsewhere. Technologies covered in our patents include the taste receptor sequences and functions, screening assays, new flavor ingredients and product applications.

I’ll now turn the discussion over to John Poyhonen, who will provide an update on commercialization and business activities. John.

John Poyhonen

Thank you, Kent. Let me start by saying we are excited that Firmenich has met its goal of receiving initial orders for S6973 from major brand clients beginning in the second quarter of 2011. As a reminder, Firmenich has exclusive worldwide rights to commercialize S6973 for virtually all food and specified beverage categories.

The GRAS designation for S6973 allows usage in numerous food products including baked goods, desserts, cereals, yogurt, gum, confectionaries, frozen offerings and sauces. Importantly various individual product types are included in each of these broad categories. In addition, S6973 can be used with dairy beverages such as flavored milk, in instant coffee and tea as well as imitation dairy products such as non-dairy creamers and whiteners.

I’ll give you some insight into their commercialization process. Firmenich has been working with their leading clients to introduce them to S6973. Some clients are using S6973 to reduce the sugar content, to improve the nutritional profile of their products. Others are evaluating the use of S6973 to increase the sweetness and improve the overall taste profile of products without having to add more sugar and calories.

I’m pleased to report that feedback from Firmenich indicates their clients are seeing strong wins and consumer acceptance as a product with S6973. Firmenich works with many multinational companies that have well known branded products. We expect a variety of potential launch strategies, which range from the first usage of S6973 and smaller product lines or new offerings through the usage of S6973 and establish larger brands.

We are encouraged by Firmenich’s activities and we anticipate that the second half of 2011 will be characterized by additional orders and we look forward to update you – updating you throughout the remainder of the year.

As Kent noted Firmenich is also continuing their commercialization activities with Senomyx’s S2383 a unique flavor ingredient that enables reduction of the high-intensity sweetener sucralose or splenda. S2383 may allow manufacturers to decrease their cost of goods while improving the taste of numerous products. S2383 is approved for used is all food and beverage product categories including baked goods, cereals, desserts, dairy products, confectionery and a wide variety of beverages.

Firmenich has exclusive worldwide rights to market S2383 as either a stand-alone ingredient or as part of a flavor system in all food and beverage product categories. Products incorporating S2383 are currently being marketed in North America and Firmenich is working with additional clients that are evaluating S2383 for a number of product lines.

And other commercialization update, Nestlé the world’s largest food and beverage company is continuing its marketing activities with products that incorporate Senomyx’s Savory Flavors. These flavors are intended to reduce or replace added monosodium glutamate or MSG in foods.

Nestlé has been marketing new and reformulated established products that contain the Savory Flavors in countries in Asia, Latin America, Africa, and the Middle East. Product launches were expanded into additional countries in these regions during the past quarter.

We have discussed previously that the European Food Safety Authority or EFSA has provided a favorable opinion for Senomyx’s S336 and S807 Savory Flavors, which means that no further evaluation is required. Final regulatory approval and commercialization in the European Union is contingent upon the ingredients being included in the EFSA Union List of Flavouring Substances. In a new development Senomyx’s regulatory advisors are now confident that both S336 and S807 are included on the Union List. Timing for the publication of the Union List however remains uncertain.

As we discussed in previous calls, approval to use Senomyx’s Savory Flavors in Europe could create a new market opportunity for Nestlé since approximately two-thirds of their is in the EU.

Ajinomoto, a leading global manufacturer of food and culinary products has been introducing products that contain a Senomyx flavor ingredient in China and North America. Ajinomoto is continuing to expand their penetration of these markets and their customer base has been increasing. Most recently, Ajinomoto achieved further geographic expansion into another emerging market with large growth potential.

Finally as Kent discussed both of our partners are conducting assessment of S6821 bitter blocker for potential commercialization. In addition, we continue to pursue new opportunities based on the demonstrated activity of S6821 to reduce bitterness in a range of products including hydrolyzed protein, menthol, caffeine, cocoa and Rebaudioside A.

This completes my update. Tony Rogers, Senomyx’s CFO will now provide an update of the financial overview of the company.

Antony Rogers

Thank you, John. Revenues were $7 million for the second quarter of 2011 compared to $5.7 million for the second quarter of 2010, an increase of 23%. Revenues were $15.7 million for the six months ended June 30, 2011 compared to $13.4 million for the six months ended June 30, 2010, an increase of 17%. The increases in revenues for the second quarter and the year-to-date were primarily due to the increase in revenue associated with our Sweet Taste Program collaborations.

Research and development expenses including stock-based expense were $7.4 million for the second quarter of 2011 compared to $7.1 million for the second quarter of 2010, an increase of 4%. Research and development expenses, including stock-based expense were $14.7 million for the six months ended June 30, 2011, compared to $13.5 million for the six months ended June 30, 2010, an increase of 9%. These increases were primarily due to increased costs for personnel-related expenses and stock-based expenses. These are partially offset by decreases in expenses for outsourced activities.

General and administrative expenses, including stock-based expense, were $2.8 million for the second quarter of 2011, compared to $3.3 million for the second quarter of 2010, a decrease of 15%. General and administrative expenses, including stock-based expense, were $5.5 million for the six months ended June 30, 2011, compared to $6.4 million for the six months ended June 30, 2010, a decrease of 14% The decreases were primarily attributable to decreases in payroll and related expenses and stock-based expense.

The net loss for the second quarter of 2011 improved to $0.08 per share, compared to a net loss of $0.12 per share for the second quarter of 2010. The net loss for the six months ended June 30, 2011 improved to $0.11 per share, compared to $0.18 per share for the six months ended June 30, 2010.

With respect to our June 30, balance sheet and specifically the status of our cash balance we ended the quarter with $62.5 million in cash, cash equivalents and investments available for sale. In addition to the cash on our balance sheet going forward, we have nearly $30 million in future research and development cash payments committed by our collaborators.

We have also approximately $26 million in potential payments associated with collaborator extension options and another $27 million in potential milestone payments. Considering our current cash balance and collaborator funding commitments, balance sheet is healthy and we are well positioned to continue to advance our programs toward commercialization.

We are pleased with our midyear financial results and for the full year 2011, Senomyx continues to expect total revenues of $30 million to $34 million, total expenses of $42 million to $44 million of which approximately $4 million to $5 million is non-cash stock-based expense. The net loss of $8 million to $10 million basic and diluted net loss of $0.21 to $0.26 per share and a yearend cash, cash equivalents and investment available for sale balance of greater than $50 million.

Finally I would like to point out that this morning we filed an S3 registration statement commonly known as the shelf registration statement with the Securities and Exchange Commission. This was done to replace the S3 we filed in August 2008, which is set to expire following its three year effective period. While we have no plans to utilize S3 at this time. We feel it is prudent corporate practice to maintain an effective registration statement should there be a compelling reason to utilize it in the future.

I’ll now turn the call back over to the operator to open up for questions.

Question-and-Answer Session

Operator

Thank you. The question-and-answer session will begin at this time. (Operator Instructions) Mr. Snyder, our first question comes from John Feeney of Janney Montgomery Scott. Please proceed.

Jonathan Feeney – Janney Montgomery Scott

Good morning Kent thank you.

Kent Snyder

Hi John, how are you?

Jonathan Feeney – Janney Montgomery Scott

Good.

Kent Snyder

Okay.

Jonathan Feeney – Janney Montgomery Scott

I wanted to talk a little bit about I guess, I mean now that we’re seeing some initial orders from that Firmenich is seeing initial orders I guess any kind of color you could give us as a kind of application this is being used for or where we can like go to look for where the different market opportunities are here.

I mean, I guess I’m always just been thinking at some point as we actually see commercialization would be actually put to and together and see this in end product but I don’t know how we can go about doing that and figuring that out?

Kent Snyder

Sure. John maybe you would like to comment on that.

John Poyhonen

Sure. John as a reminder one of the things that we’re most pleased about is just looking at how quickly Firmenich was able to get some regulatory approval to the first orders. This is the fastest in our history and we continue to work on shortening that timeframe. We think that’s indicative of the value and the market demand for S6973. Right now many companies are evaluating S6973 across a wide variety of brand and it’s a bit premature to project the ramp up until product evaluations and consumer acceptance testing have been completed.

So I think that we certainly understand your comments it’s something that we would like to provide additional insight into. Right now the companies that are making orders want to maintain the confidentially because they believe there is competitive advantage to be able to get into the marketplace before the competition does.

So they are a bit more sensitive on that and we realize overtime that it’s going to be beneficial to provide more visibility. The only other comment I’d just make on the commercialization is just reminding everyone to keep in mind that even though we got the initial order for 6973 in Q2 those orders will not be recognized until one quarter in arrears.

Jonathan Feeney – Janney Montgomery Scott

Okay that makes perfect sense. But I guess, maybe to the extent you are not giving names of companies obviously but these initial orders are these like volumes where they are using these in-house to kind of see how they work in products or are these products that are being taste tested by third parties or are these products that are actually showing up in trial market somewhere for consumer use? Can you just...

John Poyhonen

Yes.

Jonathan Feeney – Janney Montgomery Scott

Can you...

John Poyhonen

It’s a mixture. I would say right now they are smaller in nature but Firmenich has been very transparent in the forecast and allowing us to be what they could be based on successful market testing and successful launches. As you know from the food industry John often times a company will start off with a single product line and based on successful expand into others and that’s certainly the long range plans of these companies that Firmenich is working with.

Jonathan Feeney – Janney Montgomery Scott

Right. Well can you confirm whether it – is the product being sold in as part of another product that’s being bought by any consumers right now or is it just purely internal to the companies that have made these initial orders. I was wondering though, if there is somebody – if there is retail trial that’s going on?

John Poyhonen

Yes at this point we can’t provide that just based on Firmenich’s confidentiality agreement with their clients and certainly that’s something we’ll continue to work with like we have with S2383 where we’ve been able to indicate it’s actually on the shelves within North America.

Jonathan Feeney – Janney Montgomery Scott

Understood.

John Poyhonen

We understand the question very well John. It’s a great and important question and I think what we’re going to try to do is continue to overtime to provide more insights to help you model that bit more effectively.

Jonathan Feeney – Janney Montgomery Scott

Okay. I’ll pass it on. Thank you.

Kent Snyder

Okay.

John Poyhonen

Thanks, John.

Operator

Your next question comes from the line of Scott Henry of Roth Capital. Please proceed.

Scott Henry – Roth Capital

Thank you and good morning. For starters just in the income statement the $69 million, $65 million in total revenues what kind of split are we looking at there between developed and commercial?

Kent Snyder

Commercial revenues for the six months are $1.6 million.

Scott Henry – Roth Capital

Okay. And when I look at your income statement should I think about any seasonality and it seems like Q2 seems to trail off from Q1 in the past is that just I don’t know why that would be but is that a trend we should expect Q2 tending to be down a bit?

Kent Snyder

No I would not think of that as seasonality. I think of that as more just coincidence.

Scott Henry – Roth Capital

Okay just lumpiness there. And then as well with regards to the Union List I guess, I understand that you wouldn’t know exactly when it’s published but historically what was the last time it was published? Does this thing tend to come out every so often or I just want to get a sense around that?

Kent Snyder

I might ask Sharon Wicker to comment on that.

Sharon Wicker

Sure. Scott this you might recall from various discussions with us that the EU has gone through a process of changing the way they review flavors and then updating the list accordingly. So, this particular union list that we’re talking about is sort of the combination of that process. And so you can’t really kind of look back to another time, the list was published, but what we do expect is once it is published then on an ongoing basis their review will be more real time if you will.

Scott Henry – Roth Capital

Okay, thank you. That is helpful. And just a final question, when I look at commercial revenues, I understand that will be chunky right now as lot of these products are just getting rolled out, but at some point I would think a trajectory emerges as new products have less of an impact on the base business. When do you think you would start to see a trajectory start to emerge in commercial revenues, would it be reasonable to expect towards the end of 2011 or is that probably more of a 2012 event?

Kent Snyder

Scott I think that quarter-by-quarter we will get additional insight in terms of permit issues, major customers and when they might come online. I’m not sure though at this point that we’ll be able to project a trend based upon what we see in 2011 that could start to crystalize a bit better as we move in to 2012.

Scott Henry – Roth Capital

Okay, great. Thank you for taking the question.

Kent Snyder

Sure.

Operator

Your next question comes from the line of Dalton Chandler of Needham & Company. Please proceed.

Dalton Chandler – Needham & Company

Good morning. Just a follow-up on the product revenue for the quarter. I think I heard you say it was 1.6 million for the six months could you break it out by quarter?

Kent Snyder

During the second quarter it was 678,000.

Dalton Chandler – Needham & Company

Okay. And the S2383 that’s on the shelves in North America and can you give us a sense of what kind of products that’s in?

Kent Snyder

Dalton actually at this point we’re not able to provide any insight on what that product or what those products are and that’s simply due to confidentially restrictions in the agreement that we’ve with Firmenich and that Firmenich has with their customers. We’d like to be able to provide more insight but at this point in time we’re not able to.

Dalton Chandler – Needham & Company

Okay do you have a sense of when you might be able to do that? I mean is there like revenue number that you hit that they say okay you can talk about it or what’s the limiting factor?

Kent Snyder

Well unfortunately it’s not that specific that is tied to any number. I think that we’ll hope to be able to say as much possible but and I can’t say it’s a known branded product but at this point in time we’re just not able to identify what that product is. Hopefully overtime that will change.

Dalton Chandler – Needham & Company

Okay. Well thanks a lot.

Kent Snyder

Okay. Thanks, Dalton.

Operator

Your next question comes from the line of Doug Thomas of JET Investment Research. Please proceed.

Doug Thomas – JET Investment Research

Good morning good quarter. I conspicuously absent in John’s discussion was there any mention of Pepsi this morning. And I was just maybe wondering whether you could sort of talk for a few minutes about how that collaboration is going and where how much progress is being made there?

Kent Snyder

John you want to comment?

John Poyhonen

Sure. From our perspective and I think from PepsiCo’s perspective the collaboration is going extremely well. I think they have been impressed to see the new flavor ingredients that are being developed from the program. We have very specific goals whether it’s an enhancer for sucrose or high fructose corn syrup that we’re moving towards and I think they’re pleased with that progress.

And in addition Kent mentioned we continue to work in the natural field too, which continues to be a high priority, specifically a natural high potency sweetener and making good progress in that regard as well. I think probably the reason that we didn’t mention them specifically is that S6973 as you recall Doug is specifically a Firmenich product and they have the ability to sell that to all food and beverage companies.

Kent Snyder

Doug, I’ve also mentioned in my comments, I talked a little bit about S9632 our new sucrose enhancer and that did come out of our Sweet Taste collaboration. Those collaborators obviously our Pepsi and Firmenich, so both companies are highly aware of what we’re doing with that new sucrose enhancer. It’s little bit too early to comment on their specific activities regarding that enhancer at this point in time. But clearly they are aware of everything that we’re doing along this line.

Doug Thomas – JET Investment Research

And could you – Kent could you talk about where, are you inclined to want to – now that it appears like you’re having some additional successor. You are inclined to keep that for yourself, or how do you decide from going forward what you want to partner with Firmenich and what you’d prefer to keep for yourself to sell directly?

Kent Snyder

Well, actually the way the agreements work is that anything that come to out of those, the Sweet Taste program, Firmenich and PepsiCo have rights to whatever we produce. So in essence Pepsi has rights in nonalcoholic beverages. Firmenich has rights in the food category that’s a simplistic way to look at it, but that’s generally the way it works.

Kent Snyder

And the rights on that Doug. PepsiCo’s right go through August of 2014 that’s the extent of the excellent agreement with I have a couple of one year options to extend and Firmenich’s current agreement because through July of 2012 and they also have two one year options and the ability to expand. Specifically with the Sweet program all of our enhancers whether they’d be natural or synthetic have done license currently, the natural high potency sweetener program that’s only been licensed in beverages and all food categories are currently open with that program.

Doug Thomas – JET Investment Research

Okay and you’ve said in the past that whether you sell it through Firmenich to Pepsi or whether you sell to Pepsi directly your contributions to profitability I guess roughly the same?

Kent Snyder

There is a different financial scheme for each – with the Firmenich agreements we get our royalty anything that they saw for example S6973 within the PepsiCo agreement if an enhancer we get a fixed amount for every unit case they sell plus a percentage of the cost savings. The financials are a bit different. Obviously the cost savings is a function of the amount of sweetener reduction and the overall costs.

Doug Thomas – JET Investment Research

Okay, all right. And then John you mentioned also some significant future although you’re certainly not counting on all of them taken place but the R&D partner payments, the milestone payments and the partner extension payments which you outlined and sort of we’re very specific about.

In terms of my view of what sort of important I look at not so much that you can talk about specifically what customers you’ve got or what’s on the shelf but this road towards profitability and I’m just wondering looking or at least break even I’m looking at the numbers it doesn’t appear to me like you are too far from breakeven is that – Kent is that something that you are going to begin to talk about as the year unfolds here?

Kent Snyder

Well I don’t believe we’ll be talking about that specifically anytime during 2011. As you know in the past we only talk about one year at a time. I think we’ll have additional commentary on our financials as we move into 2012. But it’s probably premature to predict what those comments will be at this point.

Doug Thomas – JET Investment Research

But you should as we come to next year have a little bit more visibility in terms of what the – your cost profile is going be and so forth right I mean, I that’s what I suppose the market is looking for?

Kent Snyder

Yes I think it’s safe to say is with every passing quarter and every passing year we get a little bit better perspective in terms of the longer range financial picture of the company.

Doug Thomas – JET Investment Research

Okay, all right. Thanks guys.

Kent Snyder

Sure. Thank you.

Operator

At this time, there are no further questions. So I’ll turn the call back to Mr. Snyder to conclude. Please proceed sir.

Kent Snyder

I would like to thank all of you for participating in the Senomyx call today. This has been exciting time for Senomyx as we see the initial commercialization of our S6973 sucrose enhancer our most potentially valuable flavor ingredient to-date. In addition we’re beginning regulatory focused development activities with S9632, a very promising new sucrose enhancer. S9632’s advantageous physical properties and potential utilization in additional beverage categories could make another important asset for the company.

We anticipate a number of potential value drivers for Senomyx on the commercialization front. These include the ongoing marketing activities with our S6973 sucrose enhancer, S2383 sucralose enhancer and our Savory Flavors. In addition our partners are continuing to evaluate the S6821 Bitter Blocker for potential future commercialization. In the Discovery & Development area we are looking forward to reporting on development of the new S9632 sucrose enhancer as well as further progress with our fructose enhancer and Cooling Flavors Program activities.

We’re also working towards advances with our Salt Taste Program and lastly we are very pleased with the continued headway being made with our newest effort in natural products initiatives. From a financial perspective our healthy cash balance, along with collaborative funding commitments allow us to continue to dedicate appropriate resources to our Discovery & Development activities. We also continue to work on possible new collaborative agreements related to our Flavor Program.

This concludes our update call. We appreciate your time and interest in Senomyx. And if you have any additional questions please feel free to contact us directly or through our website. Thank you very much.

Operator

Thank you for your participation in today’s conference. This concludes the presentation. You may now disconnect. Have a wonderful day.

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